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Still unable to make payments after BK on Student loans!Suggestions?

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  • Still unable to make payments after BK on Student loans!Suggestions?

    I originally filed Chapter 13 in October '08. I had IRS debt of about $5000.00, a vehicle that I wanted to keep that was crammed down, and this of course was going to defer my student loan payments throughout the 5 year plan. I was thinking maybe the economy will be better in 5 years and I will have a better job or a raise or something. I work for the state and haven't had a raise in a while. Well, earlier this year, the vehicle included in my bankruptcy--the transmission died. It was 9 years old. There was no way I could keep paying my Chapter 13, in addition to trying to get the money for the transmission, on top of regular maintance, repairing the air conditioning and whatever else was wrong with it. That last year, it was always something with it! I spoke with my attorney and he said that the only way I could get another vehicle was to convert to Chapter 7. He said, I would then have to deal with the IRS on my own, as well as Student loans. So, the Chapter 7 discharged and they sent me my first bill, telling me that my loans were no longer in forbearance. ACS has sent me 4 pieces of mail within the last 2 weeks telling me that my first payment of over $600.00 is due 01/14/11. I had consolidated my loans well before my bankruptcy and had already used up economic hardship deferments. I got like a 3.7 interest rate. I was just about to start 12 month Forbearance the first month that I filed the Chapter 13. I have been looking for a better job, but nothing yet. My son is now applying to college. Again, I work 2 jobs and the second job allows me to make the back payments to the IRS, but there's nothing left after I pay all my living expenses--food, shelter, etc. I have already looked into the Income Based Repayment. Mine would be about $200.00 per month if I qualify but I can't even afford that. Has anybody been in a similar situation and what can be done because I have pretty much exhausted any deferments? I mean, if I can't figure something out, then I may have to file Chapter 13 again. I'm not going to risk being homeless for the sake of the student loans. I understand they have to be repaid, but there's no guarantee that everyone who has student loans and a college degree will land a job making a nice salary. I work in Social Services!
    Filed Ch.13 August 2008,
    Converted to Ch.7 03/31/10, 341 Meeting 05/05/2010, Discharged 07/16/2010

  • #2
    Income based repayment is probably your best bet at this point. It sounds like these are federal student loans, which means they can do lots of not-so-nice things to you if you decide not to pay. I realize that everyone's situation is different, and that 200 dollars a month may be a heck of a lot given your budget, but I would recommend trying out the income based repayment and maybe making a few cutbacks here and there to afford it. If you've exhausted all deferments and forbearances then there's really not a lot of other options for you.

    Incidentally, you said that you were about to start a 12 month forbearance when you filed for your 13. Since you never actually went through with that forbearance, perhaps it would still be available to you.

    Also, have you considered consolidating these student loans again with a different lender? Since they are not credit based, the bankruptcy shouldn't matter. And then you might have more deferments and forbearances available to you. Or at least a grace period for repayment.
    Last edited by KeithDoxen; 12-16-2010, 07:20 PM.

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    • #3
      Originally posted by KeithDoxen View Post
      Income based repayment is probably your best bet at this point. It sounds like these are federal student loans, which means they can do lots of not-so-nice things to you if you decide not to pay. I realize that everyone's situation is different, and that 200 dollars a month may be a heck of a lot given your budget, but I would recommend trying out the income based repayment and maybe making a few cutbacks here and there to afford it. If you've exhausted all deferments and forbearances then there's really not a lot of other options for you.

      Incidentally, you said that you were about to start a 12 month forbearance when you filed for your 13. Since you never actually went through with that forbearance, perhaps it would still be available to you.

      Also, have you considered consolidating these student loans again with a different lender? Since they are not credit based, the bankruptcy shouldn't matter. And then you might have more deferments and forbearances available to you. Or at least a grace period for repayment.

      I never thought about the forbearance. I am going to mention that to them, that since I never went through that forbearance, maybe I'm am still entitled to it.

      I did contact Direct Loans about reconsolidation and 2 different reps there told me I can not reconsolidate unless I'm adding a new loan into them. I don't have any more loans to add. Also, the interest rates now are double what mine is on my current consolidation and I'm afraid that will heavily increase the payments.
      Filed Ch.13 August 2008,
      Converted to Ch.7 03/31/10, 341 Meeting 05/05/2010, Discharged 07/16/2010

      Comment


      • #4
        If you work in public service you should qualify for the Public Service Loan Forgiveness Program. http://studentaid.ed.gov/PORTALSWebA...nglish/PSF.jsp

        Have you extended the life of the loan? That might help lower your payments, but you're not going to get much lower that the IBR rate you mentioned. You might be able to get something lower with the income contingent program, but probably not much difference. I'd find a way to make that work somehow.
        Stopped paying 8/2010, Filed 2/2011, 341 3/2011 done, Report of no distribution . . . Discharged & Closed 5/2011!

        Comment


        • #5
          Originally posted by october99 View Post
          If you work in public service you should qualify for the Public Service Loan Forgiveness Program. http://studentaid.ed.gov/PORTALSWebA...nglish/PSF.jsp

          Have you extended the life of the loan? That might help lower your payments, but you're not going to get much lower that the IBR rate you mentioned. You might be able to get something lower with the income contingent program, but probably not much difference. I'd find a way to make that work somehow.
          To get the forgiveness under the Public Service Loan Forgiveness Programs you must first make 120 (one hundred twenty) on time payments only on a Direct Consolidation Loan. That's 10 years!!

          This program started in 2007 - so I wonder who has been able to utilize it?

          To the OP: Ugh. I am so very sorry - I think education debt is fast becoming a huge albatross around the neck of our future.
          ~~ Filed Over Median Income Chapter 7: 12/17/2010 ~~ 341 Held: 1/12/2011 ~~ Discharged: 03/16/2011 ~~
          Not an attorney - just an opinionated woman.

          Comment


          • #6
            Originally posted by ValleYum View Post
            To get the forgiveness under the Public Service Loan Forgiveness Programs you must first make 120 (one hundred twenty) on time payments only on a Direct Consolidation Loan. That's 10 years!!

            This program started in 2007 - so I wonder who has been able to utilize it?

            To the OP: Ugh. I am so very sorry - I think education debt is fast becoming a huge albatross around the neck of our future.
            Sure does. By looking at OP payment I'm guessing a pretty hefty balance. They're already consolidated and maybe even at 20-25 years repayment at $600/mo. Using the IBR of $200 and forgiveness of the balance in 10 years, thats a bargain you aren't going to get on borrowed money anywhere else.
            Stopped paying 8/2010, Filed 2/2011, 341 3/2011 done, Report of no distribution . . . Discharged & Closed 5/2011!

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            • #7
              The only other way to delay your loans is to go back to school. If that is not an option then I would suggest doing the IBR. Also you can call them and explain that even 200 dollars a month is impossible. I have known some people that have gotten the student loan companies to garnish their pay. This means they could only take 15% of your pay. This may be less than the 200 dollars a month.
              Chapter 7 filed on 4/23/2010
              341 meeting on 5/28/2010
              Discharged on 8/19/2010

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              • #8
                Originally posted by october99 View Post
                Sure does. By looking at OP payment I'm guessing a pretty hefty balance. They're already consolidated and maybe even at 20-25 years repayment at $600/mo. Using the IBR of $200 and forgiveness of the balance in 10 years, thats a bargain you aren't going to get on borrowed money anywhere else.
                Don't get me wrong - the loan forgiveness is wonderful - but I was just shocked that it would take 10 years and never once being late with a payment! I wonder if the people who had made 10 years of timely payments as of 2007 got to use the program?
                ~~ Filed Over Median Income Chapter 7: 12/17/2010 ~~ 341 Held: 1/12/2011 ~~ Discharged: 03/16/2011 ~~
                Not an attorney - just an opinionated woman.

                Comment


                • #9
                  ValleYum,

                  Loan payments under the IBR Public Forgiveness program did not start until 2007. Any payments, on-time or not, that were made before 2007 will not count. No one will see a forgiveness from this program until 2017.

                  Comment

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